Japanese Buyers Fueling Illegal Logging in Romania’s Last Ancient Forests

June 22, 2016

WASHINGTON, D.C. — A new report by the Washington, D.C.-based organization the Environmental Investigation Agency (EIA) reveals that Japan’s largest trading companies are fueling illegal logging in Europe’s last great intact forests. The report, Built on Lies: New Homes in Japan Destroy Old Forests in Europe, presents newly-obtained trade data showing that nearly 50 percent of all exports from the Romanian sawmills of the Austrian company Holzindustrie Schweighofer (Schweighofer) are shipped to Japan for use primarily in housing construction – a supply chain totaling ¥20 billion in 2015 (USD $165 million). As detailed in EIA’s October 2015 report Stealing the Last Forest, Schweighofer’s sourcing practices have incentivized illegal logging in Romania for years.

Illegal logging has been widely recognized as a pervasive issue by the Romanian media, government, and civil society for more than a decade. The Romanian government estimates that nearly half of all timber cut in the country is done so illegally, and in January 2016 Romania’s president officially designated illegal logging a threat to national security. Just a decade after entering the Romanian timber market, Schweighofer had by 2013 become the country’s single largest log buyer, purchasing nearly 40 percent of all spruce cut in the country.

“This new evidence shows the large impact that Japanese buyers are having on illegal deforestation in Europe’s most pristine forests,” said Alexander von Bismarck, Executive Director of EIA.

Following increased public scrutiny over the company’s growing market share and its monopolistic control over Romania’s forest sector, Schweighofer has progressively shifted a greater proportion of its log sourcing to neighboring Ukraine, a country suffering from the highest level of corruption in Europe, and more recently, full scale armed conflict with its Russian neighbors. In 2015, Schweighofer imported nearly one million cubic meters of spruce and pine logs from Ukraine, totaling 33 percent of the timber used in its Romanian mills. This Ukrainian timber is destined in large part for the Japanese market.

Through a series of case studies, EIA’s 2015 report detailed specific examples in which Schweighofer purchased illegally logged timber and illustrated the consequences to Romania’s forests, national parks, and communities. Undercover video recorded by EIA showed top Schweighofer sourcing officials, in two separate meetings, willingly and knowingly accepting illegally harvested timber and incentivizing additional cutting through a bonus system.

A 2015 investigation by the Romanian Environment Ministry found documentation of more than 100,000 cubic meters of illegal timber in just one of Schweighofer’s mills, and evidence that Schweighofer employees were involved in organized criminal networks for the purpose of obtaining illegal timber. The investigation, now in the hands of the national prosecutors for organized crime, is ongoing. In a separate case in June 2016, a Romanian appeals court upheld a guilty verdict against two businessmen, convicted of stealing vast forest areas from the rightful owners using falsified paperwork and bribery. Court documents show that Schweighofer purchased 1,000 hectares of this forest directly and bought at least 22,000 cubic meters of timber from other parts of this stolen land, in deals that Schweighofer officials arranged with the businessmen six months before the theft occurred.

On June 3, 2016, Quality Austria, the company responsible for Schweighofer’s most recent Forest Stewardship Council (FSC) Chain of Custody (CoC) certificate, was barred from issuing new FSC certificates following complaints of violations in granting Schweighofer’s certificate. A separate investigation by FSC into Schweighofer for violations of the FSC’s “Policy of Association” for “serious allegations” relating to illegal logging is currently underway.

EIA’s new report highlights the outsized role of Japanese companies and customers in fueling illegal logging in Romania. The large amounts of exports of high-risk timber to Japan and Europe illustrate the need for Japanese and European companies to perform significant due diligence measures when sourcing from areas at high risk of illegal logging.

This case provides further evidence that Japan’s voluntary measures to prevent illegal timber imports are not sufficient to address the scale of the global trade in illegally sourced wood products. Romania’s exports of illegal timber to Japan again highlight the need for the Japanese government to act and require all companies to proactively ensure legal sourcing of wood products imports.

EIA has called on Schweighofer to publish data showing the concessions where its wood is from, which is information that under Romanian law should already accompany wood shipments as they are transported out of the forest.

“Schweighofer has assured its clients for years that its systems exclude illegal timber. Now many sources have proven this is not true,” said von Bismarck. “Today the company still refuses to publish where its wood is from. If it’s legal, why hide its origin?”

Behind the Scenes takes detailed look at how the Austrian timber giant Holzindustrie Schweighofer, one of the largest wood processors in Romania, continues to fuel the destruction of Europe’s last old growth forests, in spite of five years of pledges not to source timber from national parks or protected areas.

Peruvian forest authorities are weakening the tools and inspections necessary to prevent illegal timber trade, in the face of overwhelming evidence that Peru’s exports to the United States, China, Mexico and 15 other countries contained high percentages of illegal or high-risk wood. Moment of Truth, a new report from the non-profit Environmental Investigation Agency, demonstrates the extent of this illegal trade and the backlash against attempts to fight it.